Increase in lot size of F&O

Increase in lot size of F&O

The next month means November expiry there would be increase in lot size of index and stock future and option segment. For controlling the speculative trading of retail trader in F&O segment, market regulator SEBI has issued some guidelines to increase the lot size. The value of minimum derivative contract will increase to Rs 5 lakh. Earlier this limit was Rs 2 lakh.

Now the expert says the volume of future contract may be shift towards option segment. In option you have to pay only premium amount not the whole margin. So the expectation is there may be 5% drop in turnover of future segment. Option contract have some complex calculation for valuation so it is very difficult to participate the retail trader in this segment. The other problem is liquidity, the stock option is not much liquid. Only index options may witness the some increase in turnover.

In the last one month, the average daily turnover of option segment has been 1.5 lakh crore whereas in future segment it was just only Rs 43,000 crore. Some future contract lot size has increased up to 3 times. The lot size of nifty is 25 at present which would be 75 from next November month. So the margin would be also triple. Many stocks lot size got doubled so needed margin has also become double. The participation of retail obviously would be come down.

Overall, now the trading in derivative segment would be much costlier for retail trader.

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